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Buying shares in the best businesses can build meaningful wealth for you and your family. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held Atkore Inc. (NYSE:ATKR) shares for the last five years, while they gained 421%. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 38% in about a quarter.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
See our latest analysis for Atkore
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During five years of share price growth, Atkore achieved compound earnings per share (EPS) growth of 76% per year. The EPS growth is more impressive than the yearly share price gain of 39% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.03.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how Atkore has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Atkore stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Atkore shareholders have received a total shareholder return of 2.0% over the last year. Having said that, the five-year TSR of 39% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Atkore you should know about.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.